The financial statements and their use by company management

Accounting entities are obliged to do book-keeping according to valid laws, public orders and standards, so that at the end of every accounting period a financial statement could be made, which will provide truthful and honest image about the books and financial situation at the company. The highpoint of the work of every accountant is to correctly prepare a financial statement on time. The financial statement consists of a balance sheet, statements of profits and losses and attachements. Some companies can voluntarily, and some are obligated to, compile an overview of cash flows and an overview of the changes of the capital. All these statements/overviews are included in the financial statement and must be published in the business register. The statements provide information about the financial and property structure of a given accounting entity. They are an important source of information for all the stakeholders. The company management needs to have information about the financial state of the company, so that it can carry out the right decisions and also compare their accounting statements with the competition. Other users of the financial statement can be banks, creditors, employees and business partners, who also use the financial statement for the needs of their own analyses. The aim of this diploma thesis is an analysis of financial statements and their predicative ability in a particular accounting entity. In order to do so, a detailed analysis of the balance sheet and the profit and loss statement in a given time period will be done. Then, methods of financial analysis will be used, which will focus on important parts of these statements in greater detail. In order to check the financial health of the company, one bankruptcy predicting model and one financial health predicting model will then be applied on a given accounting entity. In the last part of the diploma thesis, 3 detection models from creative book-keeping will be used to identify possible manipulation with accountant data. In the conclusion, all the discovered data will be drawn up into a comprehensive summary and possible suggestions will be proposed to the company management